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Celestica's Toronto headquarters were originally the location of IBM's Toronto sales and support offices, which also supported a small manufacturing unit which built metal boxes for their mainframe computers and associated support systems. Eugene Polistuk, a graduate of the University of Toronto[2] who joined IBM in 1969, took over management of the Toronto manufacturing division in 1986.[3]

As IBM transitioned from a hardware company to a software and services company, the future of the manufacturing unit was in doubt despite its financial successes. In January 1994, Celestica was formed as a wholly owned subsidiary of IBM Canada.[3] Polistuk immediately invoked changes in order to break out of what he saw as a moribund management structure left from the demerger. An early decision was to institute a 5% pay cut in exchange for a profit sharing program that could reap up to 30% of base pay and other was to offer employee share options[3]

In May 1994, Polistuk met with Anthony Melman of Onex Corporation about a potential buy-out. During 1996 IBM Canada agreed to sell the business and hired Nesbitt Burns to find potential buyers. After a selection process, five were allowed to bid. Onex's bid of $750 million for 69% of the company won the final selection in October 1996.[3]

This triggered rapid expansion at Celestica. In 1997 they bought UK-based Design to Distribution, the manufacturing division of International Computers Limited which itself was part-owned by Fujitsu. Later that year they purchased major portions of Hewlett-Packard's manufacturing lines, including their PC board plant in Fort Collins, CO, their system assembly plant in New Hampshire, and their system design shop in Chelmsford, MA. In October they bought Ascent Power Technology, who had power supply manufacturing in Canada, the US and UK.[3]

In July 1998 Onex took to an Initial public offering, raising $414 million, the largest IPO in the EMS field. During the year the company bought International Manufacturing Services in Asia. By the end of the year, the company was turning over $3.2 billion annually.[3]

In April 2001 the company announced it was laying off 3,000 people, about 10% of its workforce, due to the dot-com crash[4] Losses mounted, and on 29 January 2004, the company announced that company CEO, Polistuk would be retiring. In April 2004, Stephen Delaney took over as CEO in a temporary capacity.[5]

On Friday, 12 January 2007 a shareholder class action suit was filed in New York against Celestica and members of the company's executive team. The complaint alleges that the company made materially false and misleading statements about the business and failed to disclose adverse facts, namely:

(i) that the Company was experiencing declining demand in its Mexican operations and that the division was carrying significant amounts of unneeded inventory which would have to be written off;

(ii) that the Company was experiencing declining demand in its Information Technology (IT) and Communications market segments as its larger customers scaled back purchases; and that the stock dropped when this information later became public.